TOGETHER WITH…

In today’s email:

• Is the SRA on Reddit?

• Test your chess ability

• No one wants to be a partner

• Why more law firms are merging

• Trowers wants innovative trainees

• Become a better law candidate (for free)

• Why everyone in Japan will be called “Sato”

• How climate change is linked to human rights

… and more!

EDITOR’S RAMBLE 🗣

This week, I was lucky enough to go to The 93% Club’s Social Mobility Factory (their big in-person event).

If you don’t know, The 93% Club is a members club for people who went to state schools.

They call themselves ‘the UK’s least exclusive members club’ — which I think is awesome.

Anyway, they’re doing amazing work — if you went to a state school, you should apply to join. 

(they work with a bunch of top law firms too)

- Idin

FEATURED REPORT 📰

🤝 Why more law firms are merging

What's going on here?

A report has shown a 25% increase in law firm mergers between the first quarter of 2024 compared to the first quarter of 2023.

Why are firms merging?

• ⛈️ Tough economic conditions: Smaller law firms might be more open to being acquired because of the tough economic conditions right now (high interest rates, energy costs). Things like professional indemnity insurance costs (insurance that protects against lawyers making mistakes) are much higher ‘per lawyer’ at small firms. Merging with larger firms can seem like a nice way out for partnerships facing these financial issues.

• 🇺🇸 Impact of US firms: The presence of US firms is growing in the UK. They’ve outperformed the UK firms financially — for example, partners at the top 15 US law firms in London generated profits of £1.23m on average over the last year. Partners at the top 15 UK law firms generated £985k (way less). So UK firms may end up merging with other UK firms to rival the US firms’ strength in M&A and finance. Or they might just merge with a US firm (think: A&O Shearman).

• 🌎️ Expanding geographic reach: Mergers enable firms to move into new regions. It’s quicker and less risky to merge with existing firms in the areas you want to be, as opposed to opening new offices from scratch. For example, CMS merged with the Swedish firm Wistrand to expand its reach in Scandinavia.

• 💰️ Cost savings: By becoming bigger, firms can reduce their overhead costs. For example, if you merge you’d pay for one IT system with more users — usually you can negotiate better ‘per-user’ rates if you have more people.

• 🧠 Widening expertise: Mergers allow firms to group more experts in specific areas of law and grow their practice sector offerings. Say you’re at a law firm with banking and finance expertise — but feel you need more tax experts. You could acquire a firm with strong tax partners to fill that gap.

Who’s actually merging?

Interestingly, it’s mostly smaller law firms merging with bigger ones.

Nearly two-thirds of the reported mergers in the first three months of 2024 involved firms with between five and 20 lawyers on at least one side of the deal. Those sorts of mergers are mostly driven by economic reasons (it’s hard to run a small firm in the current economy).

But, there’s also the *massive* merger of Allen & Overy and Shearman & Sterling which is set to take place on 1 May 2024 — these are both, of course, each huge firms.

As well as this, Dentons has announced a new merger with PJS Law in the Philippines, which is expected to complete sometime this year.

What’s going to happen next?

Lisa Smith, from the legal consultancy Fairfax Associates, anticipates law firm mergers will continue to increase for three years following a dip during the Coronavirus pandemic.

-

So, when you’re doing your law firm applications, make sure you double-check that the law firm’s name hasn’t just changed!

TOGETHER WITH TCLA* 🤝

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* This is sponsored content

A BIT OF FUN 😄

SRA's getting creative, huh. 🕵️

IN OTHER NEWS 🗞

• 🍃 The European Court of Human Rights delivered a landmark climate change verdict. The Court ruled yesterday that Switzerland’s government violated human rights law by failing to achieve its CO2 emissions targets, marking the first such ruling by an international court. The decision sets a legal precedent in the Council of Europe’s 46 member states, with direct implications for dozens of ongoing climate lawsuits against governments and corporations.

• 🚀 Trowers & Hamlins is introducing an innovation seat for its trainees. It's a six-month opportunity within the firm’s innovation team, where trainees can dive into legal tech and AI tools, boosting their skills and shaping the firm’s innovation strategy.

• 📉 A survey by LexisNexis shows just 25% of associates are looking to make partner at their firm in the coming five years. The report points to a drop in interest for climbing the traditional law firm ladder. Leaders note a shift towards valuing work-life balance and sense a dip in associate loyalty. Despite this, 70% of associates say a bigger pay packet could keep them around — compensation seems to be key to retention!

• 🇩🇪 DLA Piper is opening a new office in Düsseldorf. Initially, the office will house 40-50 workplaces, with plans to scale up in 2025. This expansion brings DLA Piper’s office count in Germany to five. The firm likes the look of Düsseldorf’s prime business scene, aiming for a strong local presence.

• 🛢️ Rising tensions in the Middle East pushed oil prices above $90. Oil prices have jumped above $90, an 18% increase this year. This is because of OPEC+ (a group of oil-producing countries that control oil production) capping supply and escalating Middle East tensions. This surge threatens to reignite inflation, potentially derailing expectations for interest rate cuts and shaking the stock market. Experts like JPMorgan even see prices hitting $100 a barrel.

AROUND THE WEB 🌐

• ♟️ Challenge: Try these daily chess puzzles and see if you can find the correct moves to get out of hot water.

• 💻️ Fun: Take a study break with this site which will help you find quality YouTube channels.

• 🇯🇵 Interesting: Everyone in Japan could be called “Sato” by the year 2531 unless marriage laws are changed.

Credit: r/internetisbeautiful

STUFF THAT MIGHT HELP YOU 👌

• 📹️ Free application help: If you're applying to commercial law firms, check out my YouTube channel for actionable tips and an insight into the lifestyle of a commercial lawyer in London.